Superannuation Contributions Splitting is the new superannuation legislation that allows individuals to split certain superannuation contributions to their spouse. This enables couples to share their superannuation benefits under certain conditions. More importantly, it allows single income families the access to two eligible termination payments (ETP) low rate thresholds and also two reasonable benefit limits (RBL).
The split contributions can either be made to the superannuation account already held by the spouse in the same fund, retirement savings account (RSA) or to a different approved fund.
Superannuation funds can decide whether they will offer splitting to their members and the conditions associated with such a decision.
If superannuation funds elect to make the Superannuation Contribution Splitting accessible to their members, the governing Trust Deed needs to reflect this decision. For most funds this will require an update to their existing Trust Deed to allow for this new measure.
Eligible contributions made to a superannuation fund or RSA on or after 1 January 2006 may be split to the spouse's superannuation account.
The Australian Taxation office is presently developing a template that will be used by the superannuation funds as the application form for the purpose of Superannuation Contribution Splitting.
Superannuation funds will need to request the membership details for the superannuation account of the receiving spouse with the other details necessary to make the payment. It is important that the receiving spouse can provide evidence that at the time of the application, the receiving spouse has not yet reached their preservation age, or if the receiving spouse is between their preservation age and 65 years, has not yet retired.
The Superannuation Contributions Splitting application form needs to be lodged with the fund with the contribution after the end of the relevant tax year, eg in July 2006 covering contributions for the year ended 30 June 2006. The member can only make one contribution splitting application per year.
If the member wishes to claim a deduction for personal contributions, they must advise the Fund prior to lodging a contribution splitting application.
Giving the complexity and importance of the Superannuation Contributions Splitting legislation, please contact your service provider for clarification and instructions how to take the advantage of it.
